I find it saddening and ironic that commenters here are having trouble seeing the problem. The math is right there! The buyers should just stay within their means! However, if we talk about a topic closer to the experience of the HN crowd (say, Facebook's privacy policies), the tune quickly changes. People get up in arms about the privacy policy, or the ad model, or anything else that might affect their own lives.<p>Have a little empathy. These people sign contracts without understanding what they are agreeing to, and instead of their vacation photos, they're out thousands of dollars - substantial sections of their entire net worth. On the other hand, if that sounds good, there are all sorts of payday loan companies that would love investors for new branches I'm sure.<p>Edit: I don't mean the buyers don't grasp the full cost, but that they have difficulty projecting their lives 6, 12, 18 months in the future. I'm not under the impression the people in the story are dumb or ignorant.
Part of me is disgusted that this business is allowed to operate in this manner.<p>However, the sensible side is frustrated that these people aren't doing basic math. These people are choosing to buy something that they can't afford. Do they need these items? Does anyone need a couch? Does anyone NEED a TV/wedding ring? No. You can live without it.<p>End the end: All I got from this article was: "Look at these people who don't realize where they stand financially and refuse to accept that it's not where they'd like to be."
I'm annoyed at how this story portrays these rental ripoff places as being the only choice. Sure, <i>if</i> you must buy a new $1,500 couch, then it's their only choice. But what about not buying expensive new furniture when you're poor?<p>I don't mean to blame the victim, here. But it really rubs me the wrong way that the article doesn't even mention the possibility that a person could <i>not</i> buy stuff they don't need.<p>We could do with a lot better financial education. Far too many people think of large purchases in terms of a monthly cost. We could also do with usury laws that enforced better and harder to dodge. But we could also do with a discussion of these things that doesn't paint buying a $1,500 sofa as the "only option".
> Perhaps she could have saved up the money on her own, but whenever she has tried to do so, her stash has been wiped out to handle daily needs.<p>I...what makes you think you can handle payments on a lease if you can't save what you'd be paying on those payments otherwise?<p>People are really bad at managing money. The proliferation of credit has done immense damage to peoples' abilities to conceptualize what they can afford.
Immediate gratification. It's easy to walk into Rent-a-center and come out with a TV, couch, iPad, laptop, etc without realizing that for those weekly payments, you could buy one of those items each month. In a few months you own them all outright.<p>This isn't just for low-income people. Plenty of people making a decent salary will go out and overextend themselves when they get their first apartment as well. Rent-a-center comes to take stuff back from people that make $60k/year just as often as they do from people who make $30k/year.<p>I'm also not sure I'd classify people as 'poor' who have $300/month they can spend on renting these items which are mostly luxury items. You can argue that you 'need' a TV or laptop to live, but you can get a $200 laptop or $200 TV, instead of $1,000 models.
People are ignoring the elephant in the room: a lack of intelligence on the part of these people. It's one thing to have a CS degree and figure out the maths of owning vs renting, but quite another to expect a ninth grade dropout to do the same. The idea that all people are capable of making rational choices is a myth.<p>And yes, stupid people tend to be poor, and poor people tend to be stupid. I live in a country where the vast majority of people were kept uneducated (and I profit handsomely from the educational/intelligence differential between me and them). They would be eaten alive by big business if the government didn't make an effort to protect them-and the givernment knows it is into own interest to protect the poor in the interests of social stability, since there are so many of them.<p>The way I see it, is that governments in the US have no need to protect the poor from the consequences of their own stupid choices, even if it is ethically the right thing to do.
It is interesting how this thread is split between messages of 'they should make better decisions' and then the reply/response that absolves the decision-maker by stating that it's the fault of the 'stress of poverty', not the fault of the decision-maker. I think the reason more people make these short-sighted bad decisions is exactly because they're being told that being in poverty doesn't have anything to do with the personal decisions you make but your 'circumstance'. If we tell people this, what motivation do they have to make prudent long-term decisions at the expense of short-term gratification? What they decide as an individual doesn't matter, or so their told - and they are told that it's a 'societal' problem, that 'society' needs to address/fix, so again, where's the motivation to make sacrifices at an individual level to increase one's lot in life?<p>Regardless of the reality - of the two statements "it's your decisions that affect your level of poverty" and "it's society's fault you are poor" - one of these statements empowers the individual to make better choices, and the other discourages it.<p>PS: +1 to the folks who said garage sale / thrift store / second-hand couches. It's mind-boggling that anyone struggling w/ money would buy(/rent) new furniture.
I find it saddening that the commenters here are having trouble with being empathetic.<p>People who are exploited don't need your advice. We all know that we <i>can</i> live in a lean-to made of spruce branches and dry pine needles if we had to. That's not the problem these people have.<p>Maybe the commenters here offering their well-intentioned advice are unaware of the shame and guilt that goes with being poor. It is widely believed in popular culture that your financial situation and future are within your hands and beyond reasonable misfortunes, if you end up poor, it's self-inflicted: you mismanaged your money, you decided to have an alcohol addiction, you don't know how to follow safety procedures and lost your leg, you didn't study hard in school and save money to go to college. You didn't work hard enough. You're lazy. You're stupid. You smell. You could dress better. Blah blah blah.<p>The problem is that these rent-to-own businesses exploit that shame and guilt. They're using some pretty under-handed tactics to convince economically disadvantaged people that they can afford these luxury goods they clearly cannot. They try to sound appealing by offering luxury goods to people who cannot otherwise afford them so that they can stop feeling like they are failures. They obscure the true cost of their payment plans with sticker prices that emphasize the lowest term prices and not the full cost (car advertisers like to show the lease-cost in the commercial but are required in most places I know to disclose the full price of the car in the ad).<p>To say that these people are "stupid" for falling in with these businesses is ignorant of the predatory practices these businesses are using and the complicating factors which result in poverty.
Reminds me a lot of the Sam Vimes Boots Theory:<p>"The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.<p>Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.<p>But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.<p>This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness."<p>I know people that rent to own, and while part of me is screaming "WTF, save up for a couple of months" inside, another part understands the thought process that gets you things like couches NOW but at 4x the cost.
> "Perhaps she could have saved up the money on her own, but whenever she has tried to do so, her stash has been wiped out to handle daily needs."<p>If you can't keep up with payments to yourself, you have no business entering into a contract to make payments to someone else.
> Normal families have sofas, she says, and you’ll do what it takes to feel normal.<p>This is the problem. They have certain expectations set as to what a "normal" life is. A big, fluffy, crap sofa. Park the thing in front of the T.V. and waste your time.<p>Come to the Philippines, it's a great place to reset expectations. Personally, I would rather setup the "living room" in nomadic style. Throw a rug and some cushions on the floor. Maybe arrange them around a circular bamboo table on which you can set food on. Sit around that table and talk to your family and friends.<p>> Some weeks, they couldn’t pay their cellphone bills.<p>In the Philippines, people don't have cellphone bills. Nearly everyone goes prepaid.
Rather than berating people for not considering the cost, put it into a perspective you can see.<p>Sure, eating 10,000 calories in one meal is not something your waistline can afford, and you recognize that, but that's about what that one donut a week is equivalent to over the year. It's really easy to say "Okay" to something you really really want when it's a small periodic cost, and even if at some level you know it adds up, you still can make that mistake really easily, and get irritated at the person who keeps bringing them to the Friday meeting (or whatever). So some irritation at the system allowing this behavior might be reasonable.
This pisses me off so hard. This isn't some poor person needing a couch, this is downright irresponsible on the buyer's part, and then they complain about the pricing.<p>I can hit craigslist and get free couches that are perfectly usable all day long. My house is almost entirely filled with craigslist and garage sale furniture. I have a beautiful solid wood armoir for my 26" flatscreen tv. It and everything inside it cost less than 60 bucks.<p>I don't go out buying 1000 dollar 60" tvs for 5000 dollars. That's rediculous, nobody needs to, it's just consumerism at it's worst.
What about second hand couches? I'm not sure how it all goes in the US, but here in Holland, we can get tons of free couches that look fine, do people sell everything they want to get rid of over there? - <a href="http://www.marktplaats.nl/z/huis-en-inrichting/banken-bankstellen/bank.html?query=bank&categoryId=505&sortBy=price&sortOrder=increasing" rel="nofollow">http://www.marktplaats.nl/z/huis-en-inrichting/banken-bankst...</a><p>Stuff like this disgusts me. How is it even legal to charge so much interest?!
This is exactly how the major wireless carriers work.<p>Consumers pay 2x for a phone because they can't afford to pay upfront for their phone. Or because they don't do the math to realize how how much more they're paying by financing their phone rather than saving up for it.
Look at this on a micro scale. Cell phones. Tons of people have iPhones. You can watch it happen in real time inside any T-Mobile store. Every time I go someone stomps out without an iPhone, you know why? They abolished contracts.<p>Tell someone they have to spend $650 on an iPhone <i>today</i>. They will balk.<p>Tell someone they can spend $200 on an iPhone.
They will sign their life away. And that $200 iPhone quickly becomes a much more expensive iPhone.
Interestingly the US and Great Britain complain that some other European countries do not stimulate their economy by encouraging debt financed consummation and therefore have export heavy economies (e.g. Germany). I guess this is the flip-side, poor people buying stuff they don't really need, without actually being able to afford them, because they have been conditioned to do so. It's not like you couldn't get a perfectly acceptable couch for a few hundred Euros or even for free.<p>Of course in the current economic climate anyone not investing properly and just saving money is losing roughly 2% to inflation and probably even more because the stock market has risen by much more. So countries where people have traditionally left lots of money in saving accounts get screwed over and those that are in debt are rewarded (the majority in the US and GB).
In South Africa, most consumers are poorly educated, and ignorant, and furniture retailers have been milking them in a similar way for decades. The National Credit Act, introduced in 2007, was supposed to tighten up on reckless and exploitative lending, but they figured out all the loopholes. The Marikana massacre in 2012, which was the worst example of post-apartheid unrest can be traced to ignorant mineworkers having their wages garnished by creditors.<p>In the last few months, African Bank, which owned a furniture company, imploded.<p>JD Group, the dominant furniture retailer, that was built on exploitative credit, is spinning off its financial assets.<p>Still, there is more pain ahead. How ironic that the U.S. is allowing its poor to be exploited the same way.
I used to volunteer with the American Red Cross, mostly going out to help people that were displaced by fires in their home. It was an amazing contrast to see. Almost every time we had a fire in subsidised housing units, they would be decked out like a Buddy's showroom, often complete with a bigger TV than I had. But if you went to cheap unsubsidized apartments or trailers, you'd see a lot more "found it at the curb" couches and milkcrates-as-shelves.<p>Part of that is transportation and availability. A guy living in a lower middle class or so neighborhood that drives a pickup is a lot more likely to find and grab a free / cheap couch than a single mom taking the bus to work.
Proper title should be "Rental America: Why the <i>stupid</i> pay $4,150 for a $1,500 sofa".<p>Let's stop sugar-coating this kind of nonsense and shifting the blame to predatory companies. <i>Nobody</i> made these people spend their money on <i>non-essential</i> furniture and electronics.<p>If we were talking about food, utilities, healthcare or shelter, it would be another thing entirely. But these folks have set aside delayed gratification and <i>voluntarily</i> purchased luxury items at a mark-up that would make a theater concession stand manager blush.
The attitude of renting or getting a loan for any consumer item is financial suicide.<p>Why they don't buy second hand I don't know? You can go to an auction site, get the same $1500 sofa for $500.
No "the poor", but "the idiots". The family described isn't even poor, but they waste so much money trying to live a middle class lifestyle they live seriously below their means.<p>You're poor if you have serious problems having food and a basic place to live in at the same time, without spending anything on bullshit. If your problem is 'I can't afford this sofa', or a new ipad, you aren't poor, you just aren't wealthy.
Other commenters are saying that people shouldn't buy it, a couch isn't necessary. I disagree. I've worked at 10 hour a day jobs of physical labor, where I come home too tired to do anything. Having a comfortable place to sit to recover is essential. Leaning against a wall is awkward. However, the chair I had was a 20 year old office chair falling apart. Super comfortable, even if I had to tighten the screws several times a year.
I think the point several people have made about wanting a 'normal' life is important. The relentless advertising of an unachievable life that American, and other countries', media saturates peoples lives with must be a factor. I am reasonably well off and have no money worries, live in a country where differences between rich and poor are small. I could easily afford to buy a USD 1500 sofa, I could even without any impact on my life pay the over USD 4k that the woman in the article will actually pay. But in fact I have never done either, the leather sofa I have cost me the equivalent of USD 100, in fact it cost me another USD 50 to have it delivered. The point is that the sofa does not make me feel that I am poor so I feel pressured to spend more money on it. In addition it's simply expensive to be poor as several people have pointed out, see Vimes Boots on <a href="http://discworld.wikia.com/wiki/Samuel_Vimes" rel="nofollow">http://discworld.wikia.com/wiki/Samuel_Vimes</a>
Except for mattresses, there is simply no reason to buy new furniture. I'm an engineer, I had a house fire recently and will easily have the budget to buy new furniture for my house after it is repaired. But I plan on shopping at Goodwill, Savers and Craigslist. Because new furniture is not necessary. Why would someone who is much poorer than me think otherwise?
> <i>So Abbott and her husband walked into Buddy’s this past winter, hoping to replace the old sofa in their trailer, six years old, its wiring poking through the bottom, cutting gashes into the living room floor.</i><p>I once bought a couch set for about the same price, but yet, thankfully, I could afford to pay for it up front. I got two loveseats and a couch for about $1600.<p>Funny story -- 6 years later, all were in perfectly fine condition -- the springs were NOT poking out the bottom, not cutting "gashes" in my floor.<p>I split up the set and sold them through Craigslist for about $950 total.<p>My total 6-year cost? $650, or $2/week for the whole set.<p>I'm not going to draw any broad conclusions on the wealth/capital/income gap or privilege, or anything like that -- but the author does readers a disservice to gloss over the poor assumptions that lead to many believing they are "forced" to make these kinds of purchases.
I would be nice to see businesses focus on trying to help people to a solution rather than feeding their addiction. This business helping them buy material things is just as bad as the corner street drug dealer. They are just dealing legal items instead of illegal ones.<p>If a business model were to come along that would help teach them how to attain what they want through financially responsible means instead of loan sharking, I believe it would be incredible for the impoverished society.<p>I have been in this sort of situation and I know the mindset. You can not even understand how to set goals, to figure out how to better your future! You have no idea what to do, and these business prey on that mindset.<p>However, if you had a business that taught how to save for items you need and want, how to set goals and put away money, it would greatly change these peoples lives!
The same thing that happened to the family in the article is happening to the commenters in this thread -- but in reverse!<p>Just as the furniture rental place likely never told the family that the weekly-payment total would be $4,150, the article doesn't clearly show the price the family was looking at: $57.64/week.<p>I'm much more sympathetic to their decision when looking at the two numbers they were faced with: $58 vs $1500. A bad sofa on Craigslist is $200.<p>It seems like a good solution to the problem would be to require the $4150 total to be made explicit on a standardized disclosure form, not unlike what you see on a home mortgage.
The American educational system needs to do a better job teaching financial literacy, it seems - and they need to start that education early, before irresponsible people like this one drop out of school in ninth grade.
Its interesting because:<p>1. there is a logical reason the stores charge what they do("some 75 percent of items are returned or repossessed within weeks of the transaction" Anyone care to calculate what the interest rate should be on a loan with a ~75% chance of default?)<p>2. The prices that stores charge are not a "good deal" and therefore increasing sales "hurts people"<p>3. Shouldn't people be allowed to make decisions that may be against their best interest - at least in the U.S. there is/was a national sense of personal freedom and self determination
>Abbott and Donald smoked a cigarette in the bathroom and sorted through the grim math<p>So they can afford cigarettes? I have a hard time feeling bad for people with low income and expensive vices.
Funny thing about being broke, it seems to come with an intense even overwhelming desire to feel/signal otherwise in what are usually counterproductive ways.<p>Where I grew up, everybody was pretty damn poor. Still, probably half my neighborhood or more was beholden to Rent-A-Center for a dining room set or couch. Most were ashamed to shop at K-Mart or even buy generic cereal.<p>That said, I think IKEA could do tidy business by targeting a slimmed down catalog to the areas where rent to own thrives.
This reminded me of how much more people pay for houses on loan vs with cash. If you pay using a loan, you may pay double the cost by the time it is paid off. The only plus side with a house is the possibility that the value will increase and offset the difference some. No matter how you look at it, that furniture will never increase in value.
What's probably just as infuriating to some is that I notice as my wife and I get older and get higher and higher incomes and assets it becomes increasingly easy to spend less money.<p>As an example, we just bought the company car my wife gets that we'd been driving for free for the last couple of years. We bought it at about 50% of the new value, an significantly discounted from the used price.<p>There's also things like deferred compensation, pension payments, etc that make it easier and easier for people with money to spend less and save more.<p>And related to the story, we never buy anything on credit. Not even the car we just bought. It's cash or bank transfer, or if we do pay by credit card for something it's paid each month. We keep our credit card limits quite low though.
I invite all the downvotes, but my satisfaction comes from the realization that on the bottom of your heart you <i>know</i> this is true:<p>Why stupid pay $4,150 for a $1,500 sofa?<p>Because when I was poor I collected one from the street for free. It hasn't even crossed my mind to go to a store when broken.